Mars to acquire Doane Pet Care

Mars to acquire Doane Pet Care

Mars to acquire Doane Pet Care

Brentwood, TN-based Doane Pet Care Co., which was purchased by a teachers’ pension fund five months ago, is being sold again – this time to candy giant Mars Inc. Mars, based in McLean, Va., announced Wednesday it has entered an agreement with Teachers’ Private Capital, the private equity arm of Ontario Teachers’ Pension Plan, to buy Doane’s North America operations to strengthen Mars’ pet food
business.

Terms of the deal were not disclosed. A third unnamed company is buying Doane’s European business. Doane will continue to maintain the Mars North American Pet Business in Brentwood under the leadership of current Doane President Doug Cahill. Cahill declined to comment until the deal closes in the next couple of months. Mars executives said the acquisition of Doane’s 20 U.S. plants and two distribution centers gives Mars a more efficient, geographically distributed network in which to expand its pet-care business.

Aside from making M&Ms, Snickers and Uncle Ben’s products, Mars also owns the Pedigree and Whiskas pet food brands. In the pet food business, Mars falls second in market share to Nestle Purina, according to industry analysts.

Doane bills itself as the world’s largest private label pet food supplier. One of its biggest customers is Wal-Mart, which sells Doane products under the Ol’Roy label.

Mars’ purchase of Doane is big news in the pet food industry because it goes a long way toward leveling the playing field between Mars and Nestle Purina, said David Lummis, a pet market analyst for Packaged Facts in New York. Lummis said the purchase shows that Mars is serious about going after the growing discount markets where off-brand names are sold.

“[Mars] has really cornered a big chunk of the value end of the business now,” he said.

Last August, when Doane had announced it would be sold in November to the teachers’ fund for $840 million, Cahill said Doane would be getting needed capital to restructure its more than $500 million in debt and to grow globally.

The pension fund considers itself a long-term investor, so the quick sale of Doane is unusual, said Deborah Allan, communications director for the Ontario Teachers’ Pension Plan.

“When we had an opportunity to recognize the value with putting two market leaders together, we knew it was the right thing to do,” she said.